The Risks of Romney's Anti-China Rhetoric

The presidential candidate says he wants to take "counteraction" against Beijing for its trade policies, but U.S. China-hands are skeptical.

Mitt Romney / Reuters

Mitt Romney's investment-banking background and free-market message
would seem to make him the candidate of choice for America's business
community. Except when he talks about China.

The Republican
presidential hopeful sounds more like a card-carrying union member than a
former CEO when he outlines his White House agenda for China, urging
tariffs and downplaying the threat of a trade war. He extended his tough
talk recently to the pages of The Wall Street Journal in a piece epitomizing the protectionist rhetoric he's deployed for much of his presidential campaign.

"Unless
China changes its ways, on day one of my presidency I will designate it
a currency manipulator and take appropriate counteraction," Romney
wrote. "A trade war with China is the last thing I want, but I cannot
tolerate our current trade surrender."

Politically speaking,
Romney has good reason to attack the economic relationship with the
world's largest country. The issue resonates with the conservative
activists his campaign has struggled to attract.

But the approach
has also tarnished his reputation in the business community.
Private-sector leaders aren't panicking quite yet about a leading GOP
contender sounding like a Rust-Belt Democrat, but there's a palpable
nervousness among them that Romney isn't an ally on what they consider a
crucial economic issue.

"It doesn't make a huge amount of sense," said Bill Reinsch, president of the National Foreign Trade Council. "I
don't know why anyone would think that on the first day in office, the
most important thing to do is to stick it to the Chinese."

Even
Romney allies have blasted Romney's position as oversimplified. Jon
Huntsman, the former U.S. ambassador to China, who endorsed Romney after
exiting the presidential race last month, criticized him during an
appearance on MSNBC last week. "When it comes to China, I think it's
wrongheaded when you talk about slapping a tariff on day one," Huntsman
said. "That pushes aside the reality, the complexity of the
relationship."

The political reality is something else entirely. A May 2011 survey by the Pew Research Center
found that the most conservative part of the electorate, the 11 percent
of registered voters it calls "staunch conservatives," is by far the
most eager to apply economic pressure on China. Seventy-nine percent
want to "get tough" on China instead of increasing cooperation. That's a
dramatic 30 points higher than get-tough sentiment among the "Main
Street Republicans" who account for 14 percent of registered voters.

"Republicans
tend to have more negative views about China, and the conservative base
in particular tends to have negative views toward China," said Richard
Wike, an associate director of the Pew Global Attitudes Project.

The
politics have shaped not only Romney's views but those of the
Republican Party as a whole, which has lurched leftward on free trade
with China. That helps explain the thinking behind ads like Michigan GOP
Senate candidate Pete Hoekstra's controversial Super Bowl spot, which linked too much U.S. domestic spending (and borrowing from China) with a rise in China's global dominance.

The timing of Romney's anti-China piece in The Wall Street Journal
wasn't an accident. It came during Chinese Vice President Xi Jinping's
visit to the United States. It also came during a critical time for his
campaign in Michigan, where he faces a fierce challenge from former
Pennsylvania Sen. Rick Santorum in the Feb. 28 primary. In a state where
employment has been hollowed by the decline of the manufacturing
industry, tough talk toward China seems a sure political winner.

The
business community for decades has watched presidential contenders
routinely use free trade with China as a political punching bag, only to
preserve the same policies once in office. But Romney's campaign is
giving them pause.

According to one Washington lobbyist who works
on U.S.-China relations, and who requested anonymity in order to speak
candidly, Romney's continued hammering on the issue -- he has mentioned
it frequently for months -- has raised concern among private industry
leaders that this is more than rhetoric. "He has clearly staked out a
position," said the lobbyist, who backed Romney in 2008.

Romney's
stand also doesn't sit well in free-market circles, where some dispute
the idea that China's currency manipulation has wreaked havoc on the
U.S. economy. That a former CEO would lend credence to the theory shifts
the public debate leftward, said Derek Scissors, a research fellow who
focuses on Asia at the conservative Heritage Foundation. "I've had
members of Congress say to me, 'You know, Romney thinks you're wrong,'
when I'll make argument that the exchange rate doesn't affect us," he
said.

Challengers to a sitting president usually attack
incumbents as soft on China, putting Romney -- who calls President Obama
a "supplicant" to China -- well in the mainstream. But Scissors said
there's a difference this year because Obama, who imposed a tariff on
tires imported from China, is already farther to the protectionist left
on China trade than any recent president. "Republicans have made a
choice that even though President Obama is ambivalent about free trade
and on the protectionist side, we're going to move even farther" in that
direction, he said.

Harming trade with China would have huge
reverberations across the U.S. economy. According to the Census Bureau,
China was America's second-largest trading partner in 2011, behind only
Canada. It accounted for 13.6 percent of all trade. In other words,
billions upon billions of dollars are at stake.

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